Tax & Accounting News

Share Scheme Is Extended

29/10/2009

Enterprise Management Incentive (EMI) schemes are designed to help small, higher-risk companies to recruit and retain staff and reward them for taking a risk by devoting their time and skills to a smaller firm, by offering them share options in the company.

The grant of the share option is usually free of income tax and National Insurance (NI), making the scheme particularly attractive to higher earners who will be hit by the increased tax rates from next year.

There was some good news recently for companies that are considering introducing such a scheme, with the government announcing a relaxation in the rules from 6 April 2010. Currently, a company’s activities must be ‘wholly or mainly’ in the UK in order to qualify for EMI, but under the proposed changes a company will only need to have a ‘permanent establishment’ in the UK. This should help UK firms with substantial overseas interests, as well as overseas firms with a permanent base in the UK.

The European Commission has also recently agreed to grant State Aid approval to the EMI scheme until at least April 2018, providing some reassurance regarding the medium-term future of the scheme.

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